Just saw the latest figures on the US money supply M2, and honestly, it's an interesting signal for the market. In May, the money supply M2 in the US hit a new record — we're talking about nearly $22 trillion. That's a significant increase compared to the previous high of $21.72 trillion from March 2022.

What stands out especially: the annual growth rate is currently at 4.5 percent. This is the highest level in nearly three years. Normally, one would think that more money in circulation means looser financial conditions and a growth-friendly environment — exactly what riskier assets like Bitcoin should favor.

But here it gets complicated. Historically, a growing M2 aggregate has a delayed effect on inflation. The best example: M2 growth surged in February 2020, but the PCE inflation (the Fed’s preferred inflation measure) only increased a year later. If this pattern repeats, the rising US M2 money supply could lead to inflationary pressure in the coming months.

And that’s precisely where things become problematic for crypto. Higher inflation could pressure the Fed to raise interest rates instead of cutting them. That would reduce investors’ risk appetite and could slow down Bitcoin and other assets. At the same time, we see that BTC and the Nasdaq recently rose, which means paper gains for US investors. But consumer confidence has fallen to record lows — a classic divergence between Wall Street and Main Street.

The message of the M2 money supply is thus contradictory. On one hand, the growth signals economic expansion; on the other, it could lead to inflationary problems that complicate Fed policy. For crypto investors, it remains to be seen how this dynamic develops. The current Bitcoin price is at $80,920 — it will be interesting to watch how the market reacts to these M2 developments.